Before markets closed for the weekend the Pound managed to claw back previous losses against the Euro and return to trending in the region of 1.1700.
There are a number of reports with the potential to spark movement in the GBP/EUR exchange rate next week, including the UK’s latest manufacturing and construction PMIs. As the figures relate to the period following the EU referendum, their impact may be significant.
Should the key sectors have moved further into contractionary territory the Pound could easily return to trending in the region of the three year low of 1.14 seen earlier in August.
(Previously updated 25/08/2016)
In a ‘typically GBP’ move, the Pound has fallen dramatically against its peers including the Euro today, after UK-supporting news came out. The data in question concerned the Confederation of British Industries (CBI) distributive trades for August, which rose healthily from -14 to 9.
This was taken with a degree of scepticism by economists and investors, however, who may have put the good news down to the bias of a week Pound and summer tourist spending.
The Euro moved in the opposite direction to the Pound over the course of the European trading session, climbing despite the earlier drop in German Ifo surveys of confidence. The appreciation likely stemmed from investors realising that the result was still positive after the drop and in the words of ING-DiBa Economist Carsten Brzeski, the German economy still moves in a ‘virtuous circle’.
The next UK news expected will come over tomorrow morning, when the Q2 GDP growth rate second estimates are due. Gains have been forecast on the year and quarter, but as Q2 doesn’t properly cover the post-Referendum period, the outcome may be discounted.
From the Eurozone, the Gfk consumer confidence results for Germany will be out in the early morning and are expected to show a fractional dip from 10 points to 9.9.
(Last updated 25th August, 2016)
The Pound has technically traded poorly against the Euro with a drop of -0.3% this morning, though this comes when the 1.17 rate is still the best seen this week.
UK news has been limited so far, with the main focus being on the fact that over a million cars have been manufactured in the UK since the start of 2016. As most of these vehicles are being exported to mainland Europe, however, the data has only raised the stakes for UK negotiators to get a good trade deal with their EU counterparts, so as to keep this lucrative export stream flowing.
The Euro has traded tightly against its rivals, owing to Eurozone data so far showing a dip in the Spanish finalised GDP growth rate on the year for the second quarter.
The next pairing data will come from the Eurozone, where Germany’s positively forecast Ifo survey results for August are due shortly. Later on in the morning, negatively predicted UK CBI trades data for August is expected.
(Last updated 25th August, 2016)
The Euro flopped against the bulk of its rivals during the middle of the week, with mixed German GDP failing to inspire any real confidence in the single currency. Today could offer a chance for redemption, with incoming German results expected to print positively.
UK Economic News: Pound Sterling (GBP) Sustained Weekly Rally Yesterday on Gathering Optimism
Pound Euro exchange rate movement has been consistently positive over the current week, with investors increasingly showing confidence in the Pound despite wider signals that the post-Referendum UK economy is under pressure.
The latest ‘positive’ news has come from the British Banker’s Association, which has released its mortgage approvals figure for July. A slowdown was seen from 39.76k to 37.66k, while a deeper inspection of the results showed that credit card spending remained high after the Referendum.
IHS Chief UK Economist Howard Archer, one of many economists who held reservations about such a seemingly benign market reaction to ‘Brexit’, stated;
‘We suspect that the fundamentals for consumers will become less favourable over the coming months with purchasing power likely diminishing and the labour market softening’.
Euro (EUR) Declined on Wednesday after Finnish and German Ecostats Disappointed Investors
Euro exchange rate movement progressively worsened over Wednesday’s European trading session, on account of a trio of unfavourable announcements out of the Eurozone.
Opening off trading was the Finnish producer price index (PPI) for July, which dropped on the year from -3.4% to -3.8%. Around the same time, Germany’s finalised Q2 GDP growth rate dropped on the quarter but rose on the year.
The tail-end of the Euro’s run of bad luck came from Belgium, where the August business confidence result fell dramatically from 1 to -3.1.
Future GBP EUR Forecast: Pound could Drop after UK CBI and German Survey Data
The next key pairing data will come from the Eurozone, where the results of Germany’s Ifo August surveys are scheduled for announcement shortly.
The general consensus is that opinions on business climate, current conditions and expectations will all rise, which could go some way to pushing the Euro up against the Pound.
On the UK’s side of trading, the morning’s Confederation of British Industry (CBI) distributive trades figure for August has been predicted to shift in a negative range from -14 to -11.
Recent GBP, EUR Exchange Rates
The Pound Euro (GBP EUR) exchange rate has been trending in the region of 1.1776 and the Euro Pound (EUR GBP) exchange rate has been trending in the region of 0.8492 recently.